SAFECO to Focus on Strength in Commercial Lines -- The Small-to-Medium Business Market.

Business Editors, Insurance Writers

SEATTLE--(BUSINESS WIRE)--May 17, 2001

SAFECO (Nasdaq:SAFC) today announced plans to consolidate its commercial operations and focus on insurance for small-to-medium sized businesses.

The new SAFECO Business Insurance enterprise will be headquartered in Seattle, with five underwriting operations located in Atlanta, Dallas, Indianapolis, Seattle and Fountain Valley, Calif.

"We are going to do more of what we do best," said Mike McGavick, SAFECO president and CEO. "SAFECO is a leader in the small-to-medium commercial insurance segment, and we are intensifying our efforts to grow this profitable market segment.

"The small-to-medium business market has tremendous growth and profit potential," he stated. "SAFECO is positioning itself to capture an even greater share of this market." The company has a number of ambitious initiatives to help agents and brokers build this market, including streamlined underwriting, Contact Centers for servicing, and real-time agent Internet processing for producing new business.

Another key initiative is to create a centralized facility to underwrite larger commercial accounts. "While this special facility will improve access to the large commercial market for our most valuable agents and brokers -- those who sell SAFECO's core personal and small-to-medium commercial insurance products," said McGavick, "we expect our total large commercial volume to decrease as we concentrate on the small-to-medium marketplace."

"We are targeting efficiency and expenses as well with this consolidation," noted Dale Lauer, chief operating officer of the new SAFECO Business Insurance enterprise. "SAFECO's refocusing of its commercial operations will result in a reduction of approximately 450 jobs as well as some job transfers.

"We recognize our strategic repositioning will disrupt or displace some of our employees," said Lauer. "Although difficult, it is necessary to SAFECO's performance improvement and growth in the small-to-medium commercial insurance market."

As part of its overall strategy to focus on core business lines, the company also is reviewing its SAFECO Select Markets operation, including its specialty commercial lines of medical malpractice, professional liability, specialty programs and surplus lines business.

SAFECO, in business since 1923, provides insurance and related financial products to individuals and businesses, selling its products through more than 17,000 independent agents and financial advisors. More information on SAFECO can be found at www.safeco.com.

Forward-looking information is subject to risk and uncertainty

Statements made in this report that relate to anticipated financial performance, business prospects and plans, regulatory developments and similar matters may be considered "forward-looking statements" as defined in the Private Securities Litigation Reform Act of 1995. Statements in this report that are not historical information are forward-looking. Such statements are subject to certain risks and uncertainties that may cause the operations, performance, development and results of SAFECO's business to differ materially from those suggested by the forward-looking statements.

The risks and uncertainties include:

 -- Achievement of expense savings from consolidation of commercial operations; and  -- Decrease in large-commercial premium volume.